"I believe that nothing can be greater than a business, however small it may be, that is governed by conscience; and that nothing can be meaner or more petty than a business, however large, governed without honesty and without brotherhood
Transparency and accountability are the two basic tenets of Corporate Governance. At Hindustan Unilever, we feel proud to belong to a Company whose visionary founders laid the foundation stone for good governance long back and made it an integral principle of the business, as demonstrated in the words above.
Responsible corporate conduct is integral to the way we do our business. Our actions are governed by our values and principles, which are reinforced at all levels within the Company. At Hindustan Unilever, we are committed to doing things the right way which means taking business decisions and acting in a way that is ethical and is in compliance with applicable legislation. Our Code of Business Principles is an extension of our values and reflects our continued commitment to ethical business practices across our operations. We acknowledge our individual and collective responsibilities to manage our business activities with integrity. Our Code of Business Principles inspires us to set standards which not only meet applicable legislation but go beyond in many areas of our functioning.
To succeed, we believe, requires highest standards of corporate behaviour towards everyone we work with, the communities we touch and the environment on which we have an impact. This is our road to consistent, competitive, profitable and responsible growth and creating long term value for our shareholders, our people and our business partners. The above principles have been the guiding force for whatever we do and shall continue to be so in the years to come.
The Board of Directors ('the Board') is responsible for and committed to sound principles of Corporate Governance in the Company. The Board plays a crucial role in overseeing how the management serves the short and long term interests of shareholders and other stakeholders. This belief is reflected in our governance practices, under which we strive to maintain an effective, informed and independent Board. We keep our governance practices under continuous review and benchmark ourselves to best practices across the globe.
The Board of Directors has adopted 'Corporate Governance Code' for the Company which is a statement of practices and the procedures to be followed by the Company. The copy of the code is available on Company's website www.hul.co.in/ <http://www.hul.co.in/> investor relations/ Corporate Governance/
THE BOARD OF DIRECTORS
The Board of Directors is entrusted with the ultimate responsibility of the management, general affairs, direction and performance of the Company and has been vested with requisite powers, authorities and duties. The Management Committee of the Company is headed by the Managing Director and Chief Executive Officer and has business / functional heads as its members, which look after the management of the day-to-day affairs of the Company
The Board comprises such number of Non-Executive, Executive and Independent Directors as required under applicable legislation. As on date of this Report, the Board consists of nine Directors comprising one Non-Executive Chairman, five Independent Directors and three Executive Directors. The composition of the Board represents an optimal mix of professionalism, knowledge and experience and enables the Board to discharge its responsibilities and provide effective leadership to the business. The positions of the Chairman of the Board and the Chief Executive Officer of the Company are held by separate individuals, where the Chairman of the Board is a Non-Executive Director. None of the Directors of your Company are related to each other.
During the year, Mr. Sridhar Ramamurthy, consequent to his elevation as Senior Vice President, Finance for Global Markets, Unilever stepped down as the Executive Director, Finance & IT and Chief Financial Officer of the Company. Mr. P. B. Balaji was appointed as the Executive Director, Finance & IT and Chief Financial Officer succeeding Mr. Sridhar Ramamurthy on the Board with effect from 1st July, 2014.
Appointment and Tenure
The Directors of the Company are appointed by Members at the General Meetings. In accordance with the Articles of Association of the Company, all Directors, except the Managing Director and Independent Directors of the Company, step down at the Annual General Meeting each year and, if eligible, offer themselves for re-election. The Managing Director of the Company is appointed for a term of five years as per the requirement of the statute. The Executive Directors on the Board serve in accordance with the H terms of their contract of service with the Company.
As regards the appointment and tenure of Independent Directors, following is the policy adopted by the Board:
• The Company has adopted the provisions with respect to appointment and tenure of Independent Directors which are consistent with the Companies Act, 2013 and Listing Agreement.
• The Independent Directors will serve a maximum of two terms of five years each.
• The Company would not have any upper age limit of retirement of Independent Directors from the Board and their appointment
Our definition of 'Independence' of Directors is derived from Clause 49 of the Equity Listing Agreement and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, all Non-Executive Directors other than the Chairman are Independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013. Mr. Harish Manwani, who was acting as Chief Operating Officer of the parent Company till 31st December, 2014, is not considered as an Independent Director.
The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. The Board / Committee Meetings are pre-scheduled and a tentative annual calendar of the Board and Committee Meetings is circulated to the Directors well in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, the Board's approval is taken by passing resolutions by circulation, as permitted by law, which is noted and confirmed in the subsequent Board meeting.
The notice of Board meeting is given well in advance to all the Directors. Usually, meetings of the Board are held in Mumbai. The Agenda of the Board / Committee meetings is set by the Company Secretary in consultation with the Chairman and the Chief Executive Officer of the Company. The Agenda is circulated a week prior to the date of the meeting. The Agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision.
During the Financial Year ended 31st March, 2015, eight Board meetings were held on 28th April, 2014, 29th and 30th April, 2014, 28th July, 2014, 5th September, 2014, 27th October, 2014, 19th December, 2014, 19th January, 2015 and 17th and 18th March, 2015. The maximum interval between any two meetings was well within the maximum allowed gap of 120 days.
The normal business of the Board includes:
• framing and overseeing progress of the Company's annual plan and operating framework;
• framing strategies for shaping of portfolio and direction of the Company and for corporate resource allocation;
• reviewing financial plans of the Company;
• reviewing quarterly and annual business performance of the Company;
• reviewing the Annual Report and accounts for adoption by the Members;
• reviewing the progress of various functions and businesses of the Company;
• reviewing the functioning of the Board and its Committees;
• reviewing the functioning of the subsidiary companies;
• considering and approving declaration / recommendation of dividend;
• reviewing and resolving fatal or serious accidents or dangerous occurrences, any materially significant effluent or pollution problems or significant labour issues, if any;
• reviewing the details of significant development in human resources and industrial relations front;
• reviewing details of foreign exchange exposure and steps taken by the management to limit the risks of adverse exchange rate movement;
• reviewing compliance with all relevant legislations and regulations and litigation status, including materially important show cause, demand, prosecution and penalty notices, if any;
• reviewing Board Remuneration Policy and individual remuneration packages of Directors;
• advising on corporate restructuring such as merger, acquisition, joint venture or disposals, if any;
• appointing Directors on the Board and Members of Management Committee;
• reviewing Corporate Social Responsibility policy of the Company and monitoring implementation thereof;
• reviewing details of risk evaluation and internal controls;
• reviewing reports on progress made on the ongoing projects;
• monitoring and reviewing Board Evaluation framework.
The Company Secretary is responsible for collation, review and distribution of all papers submitted to the Board and Committees thereof for consideration. The Company Secretary is also responsible for preparation of the Agenda and convening of the Board and Committee meetings. The Company Secretary attends all the meetings of the Board and its Committees, advises / assures the Board on Compliance and Governance principles and ensures appropriate recording of minutes of the meetings.
With a view to leverage technology and reducing paper consumption, the Company has adopted a web-based application for transmitting Board / Committee Agenda and Pre-reads. The Directors of the Company receive the Agenda and Pre-reads in electronic form through this application, which can be accessed through Browsers or iPads. The application meets high standards of security and integrity that is required for storage and transmission of Board / Committee Agenda and Pre-reads in electronic form.
Separate Independent Directors' Meetings
The Independent Directors meet at least once in a quarter, without the presence of Executive Directors or Management representatives. They also have a separate meeting with the Non-Executive Chairman, to discuss issues and concerns, if any.
The Independent Directors met four times during the Financial Year ended 31st March, 2015 on 28th April, 2014, 28th July, 2014, 27th October, 2014 and 19th January, 2015 and inter alia discussed:
• the performance of non-Independent Directors and the Board as a whole;
• the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non Executive Directors; and
• the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
In addition to these formal meetings, interactions outside the Board meetings also take place between the Chairman and Independent Directors.
Directors' Induction and Familiarization
The provision of an appropriate induction programme for new Directors and ongoing training for existing Directors is a major contributor to the maintenance of high Corporate Governance standards of the Company. The Chief Executive Officer and the Company Secretary are jointly responsible for ensuring that such induction and training programmes are provided to Directors. The Independent Directors, from time to time request management to provide detailed understanding of any specific project, activity or process of the Company. The management provides such information and training either at the meeting of Board of Directors or otherwise.
The induction process is designed to:
a. build an understanding of Hindustan Unilever, its businesses and the markets and regulatory environment in which it operates;
b. provide an appreciation of the role and responsibilities of the Director;
c. fully equip Directors to perform their role on the Board effectively; and
d. develop understanding of Company's people and its key stakeholder relationships.
Upon appointment, Directors receive a Letter of Appointment setting out in detail, the terms of appointment, duties, responsibilities and expected time commitments.
In addition to the extensive induction and training provided as part of the familiarization programme, the Independent Directors are also taken through various business and functional sessions in the Board meetings including the Board meetings to discuss strategy.
The details of Director's induction and familiarization are available on the Company's website at www.hul.co.in/investorrelations/ Corporate Governance/
The Nomination and Remuneration Committee of the Company approved a Evaluation Policy during the year, which was adopted by the Board of Directors. The policy provides for evaluation of the Board, the Committees of the Board and individual Directors, including the Chairman of the Board. The Policy provides that evaluation of the performance of the Board as a whole, Board Committees and Directors shall be carried out on an annual basis and the same will be facilitated by an independent consultant once in three years.
During the year, the first Evaluation cycle was completed by the Company internally which included the Evaluation of the Board as a whole, Board Committees and Directors. The exercise was led by the Non Executive Chairman along with a Senior Independent Director of the Company. The Evaluation process focused on various aspects of the Board and Committees functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors on parameters such as attendance, contribution and independent judgement. structure of the Company and have been constituted to deal with specific areas / activities which concern the Company and need a closer review. The Board Committees are set up under the formal approval of the Board to carry out clearly defined roles which are considered to be performed by members of the Board, as a part of good governance practice. The Board supervises the execution of its responsibilities by the Committees and is responsible for their action. The minutes of the meetings of all Committees are placed before the Board for review. The Board Committees can request special invitees to join the meeting, as appropriate.
The Board has currently established the following statutory and non-statutory Committees.
The Company's Audit Committee comprises all the five Independent Directors. The Audit Committee is headed by Mr. Aditya Narayan and has Mr. S. Ramadorai, Mr. O. P. Bhatt, Dr. Sanjiv Misra and Ms. Kalpana Morparia as its members. During the year, Ms. Kalpana Morparia was appointed as a Member of the Committee with effect from 9th October, 2014. All the members of the Committee have relevant experience in financial matters.
The Audit Committee of the Company is entrusted with the responsibility to supervise the Company's internal controls and financial reporting process and inter alia performs the following functions:
• overseeing the Company's financial reporting process and disclosure of financial information to ensure that the financial statements are correct, sufficient and credible;
• reviewing and examination with management the quarterly financial results before submission to the Board;
• reviewing and examination with management the annual financial statements before submission to the Board and the auditors' report thereon;
• review management discussion and analysis of financial condition and results of operations;
• scrutiny of inter-corporate loans and investments made by the Company;
• reviewing with management the annual financial statements as well as investments made by the unlisted subsidiary companies;
• reviewing, approving or subsequently modifying any Related Party Transactions in accordance with the Related Party Transaction Policy of the Company;
• approving the appointment of Chief Financial Officer after assessing the qualifications, experience and background, etc. of the candidate;
• recommending the appointment, remuneration and terms of appointment of Statutory Auditors of the Company and approval for payment of any other services;
• reviewing and monitoring the auditor's independence and performance, and effectiveness of audit process;
• reviewing management letters / letters of internal control weaknesses issued by the Statutory Auditors;
• discussing with Statutory Auditors, before the audit commences, on the nature and scope of audit as well as having post-audit discussion to ascertain area of concern, if any;
• reviewing with management, Statutory Auditors and Internal Auditor, the adequacy of internal control systems;
• recommending appointment, remuneration and terms of appointment of Internal Auditor of the Company;
• reviewing the adequacy of internal audit function and discussing with Internal Auditor any significant finding and reviewing the progress of corrective actions on such issues;
• evaluating internal financial controls and risk management systems;
• valuating undertaking or assets of the Company, wherever it is necessary;
• reviewing the functioning of the Whistle Blowing mechanism;
• reviewing the progress made on cases that are reported under the Code of Business Principles of the Company and implication of these cases, if any, under the UK Bribery Act, 2011.
In addition to quarterly meetings for consideration of financial results, special meetings of the Audit Committee are convened. In these meetings, the Audit Committee reviews various businesses / functions, business risk assessment, controls and critical IT applications with implications of security and internal audit and control assurance reports of all the major divisions of the Company. The Audit Committee also reviews the functioning of the Code of Business Principles and Whistle Blower Policy of the Company and cases reported thereunder. The recommendations of audit committee were duly approved and accepted by the Board.
The meetings of Audit Committee are also attended by the Chief Executive Officer, Chief Financial Officer, Statutory Auditors and Internal Auditor as special invitees. The Company Secretary acts as the Secretary to the Committee. The minutes of each Audit Committee meeting are placed and confirmed in the next meeting of the Board. The Audit Committee also meets the internal and external auditors separately, without the presence of Management representatives.
The Audit Committee met six times during the Financial Year ended 31st March, 2015 on 28th April, 2014, 9th June, 2014, 28th July, 2014, 27th October, 2014, 19th December, 2014 and 19th January, 2015.
Internal Controls and Risk Management
The Company has robust systems for internal audit and corporate risk assessment and mitigation. The Company has an independent Control Assurance Department (CAD) assisted by dedicated outsourced audit teams.
The Internal Audit covers all the factories, sales offices, warehouses and centrally controlled businesses and functions, as per the annual plan agreed with the Audit Committee. The audit coverage plan of CAD is approved by the Audit Committee at the beginning of every year. Every quarter, the Audit Committee of the Board is presented with key control issues and actions taken on the issues highlighted in previous report.
Business Risk Assessment procedures have been set in place for self-assessment of business risks, operating controls and compliance with Corporate Policies. There is an ongoing process to track the evolution of risks and delivery of mitigating action plans.
During the year, on the recommendation of the Audit Committee, the Board of Directors appointed Mr. V. Hariharan as the Internal Auditor of the Company.
Financial controls review procedures and guidelines are issued by Unilever annually in line with Sarbanes-Oxley (S. 404) requirements. Unit heads are responsible for implementing these procedures to confirm the effectiveness of the financial controls in that unit and to correct any instances of weaknesses identified. In addition, effectiveness of operational and non-financial controls is also reviewed by the unit heads.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee comprises Mr. S. Ramadorai as the Chairman and Mr. Aditya Narayan, Mr. O. P. Bhatt, Dr. Sanjiv Misra and Mr. Harish Manwani as members of the Committee. During the year, Mr. Sanjiv Mehta stepped down as a member of the Committee with effect from 23rd June, 2014 to make the composition of the Committee consistent with requirements of revised clause 49 of Listing Agreement. In terms of Section 178 (1) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Nomination and Remuneration Committee should comprise of at least three Directors; all of whom should be Non-Executive Directors. At least half of the Committee members should be Independent with an Independent Director acting as the Chairman of the Committee.
The role of Nomination and Remuneration Committee is as follows:
• Determine/ recommend the criteria for appointment of Executive, Non-Executive and Independent Directors to the Board;
• Determine/ recommend the criteria for qualifications, positive attributes and independence of Director;
• Identify candidates who are qualified to become Directors and who may be appointed in the Management Committee and recommend to the Board their appointment and removal;
• Review and determine all elements of remuneration package of all the Executive Directors, i.e. salary, benefits, bonuses, stock options, pension etc;
• Review and determine fixed component and performance linked incentives for Directors, along with the performance criteria;
• Determine policy on service contracts, notice period, severance fees for Directors and Senior Management;
• Formulate criteria and carryout evaluation of each Director's performance and performance of the Board as a whole;
The Committee also plays a role of a Compensation Committee and is responsible for administering the Stock Option Plan and Performance Share Plan of the Company and determining eligibility of employees for stock options. During the year, the Nomination and Remuneration Committee has formulated the policy on Board Diversity to ensure diversity of experience, knowledge, perspective, background, gender, age and culture.
The Nomination and Remuneration Committee met five times during the Financial Year ended 31st March, 2015 on 28th April, 2014, 28th July, 2014, 5th August, 2014, 5th September, 2014 and 18th February, 2015.
Board Membership Criteria
The Board of Directors are collectively responsible for selection of a member on the Board. The Nomination and Remuneration Committee of the Company follows a defined criteria for identifying, screening, recruiting and recommending candidates for election as a Director on the Board. The criteria for appointment to the Board include:
• composition of the Board, which is commensurate with the size of the Company, its portfolio, geographical spread and its status as a listed Company;
• desired age and diversity on the Board;
• size of the Board with optimal balance of skills and experience and balance of Executive and Non-Executive Directors consistent with the requirements of law;
• professional qualifications, expertise and experience in specific area of business;
balance of skills and expertise in view of the objectives and activities of the Company;
• avoidance of any present or potential conflict of interest;
• availability of time and other commitments for proper performance of duties;
• personal characteristics being in line with the Company's values, such as integrity, honesty, transparency, pioneering mindset.
The Reward philosophy of the Company is to provide market competitive total reward opportunity that has a strong linkage to and reinforces the performance culture of the Company. This philosophy is set forth into practice by various policies governing the different elements of total reward. The intent of all these policies is to ensure that the principles of reward philosophy are followed in entirety, thereby facilitating the Company to recruit and retain the best talent. The ultimate objective is to gain competitive advantage by creating a reward proposition that inspires employees to deliver Company's promise to consumers and the world and achieve superior operational results.
The guiding principles for Company's reward policies / practices are as follows:
1. Open, Fair, Consistent and Explainable: increase transparency and ensure fairness and consistency in Reward framework.
2. Insight and Engagement: make Reward truly relevant to the employees by using leading edge tools that helps the Company 'hear' how employees feel about their Reward.
3. Innovation: continuously improve Company's Reward through innovations based on insight, analytics and Unilever's expertise.
4. Simplicity, Speed and Accuracy: simplify reward plans and processes and deliver the information employees need quickly, clearly and efficiently.
5.Business Results: Company's business results are the ultimate test of whether Reward solutions are effective and sustainable.
The appointment of Executive Directors, Key Managerial Personnel, Management Committee members and other employees is by virtue of their employment with the Company as management employees and therefore, their terms of employment vis-a-vis salary, variable pay, service contract, notice period and severance fee, if any, are governed by the applicable policies at the relevant point in time. The total reward for Executive Directors, Key Managerial Personnel and Management Committee members is reviewed and approved by the Nomination and Remuneration Committee annually, taking into account external benchmarks within the context of group and individual performance.
A fair portion of Executive Directors' total reward is linked to Company's performance. This creates alignment with the strategy and business priorities to enhance shareholder value. Long term incentives in the form of Share Plans, seek to reward Executive Directors, Management Committee members and other eligible employees by aligning their deliverables to business results. Pursuant to the approval of Members at the Annual General Meeting held on 23rd July, 2012, the Company adopted '2012 HUL Performance Share Scheme', which provides for conditional grant of Performance Shares without charging premium to eligible management employees.
In line with the Evaluation Policy of the Company, the Nomination and Remuneration Committee considers the outcome of the annual Evaluation before recommending the changes in the remuneration of the Executive Directors and appointment/re-appointment of Directors.
Non-Executive Independent Directors are eligible for sitting fees and commission not exceeding the limits prescribed under the Companies Act, 2013. The remuneration payable to NonExecutive Directors is decided by the Board of Directors subject to the overall approval of Members of the Company.
Independent Directors are currently paid sitting fees of Rs. 20,000/- for attending every meeting of the Board or Committee thereof which has been revised to Rs. 30,000/- with effect from 1st April, 2015. In line with the globally accepted governance practices, the Board of Directors adopted a 'Differential Remuneration Policy' for Non-Executive Directors' remuneration. As per the Differential Remuneration Policy, NonExecutive Independent Directors are entitled to fixed commission on profits at the rate of Rs. 15 lakhs for each financial year. In addition, Non-Executive Independent Directors are entitled to a remuneration linked to their attendance at the meetings of the Board or Committees thereof and also on the basis of their position in various Committees of the Board, whether that of a Chairman or a member of the Committee(s).
The remuneration payable to the Independent Directors under the Differential Remuneration Policy shall be within the overall limit of Rs. 150 lakhs, as approved by the Members at the Annual General Meeting held on 26th July, 2013. The criteria adopted by the Company for Differential Remuneration policy is as under:
Additional Variable Commission:
Corresponding to the percentage of attendance at all the Board and Committee Meeting(s) 5.00 In the capacity of Chairperson of the Committee(s)* 2.00 In the capacity of Member of the Committee(s)* _1.00
* Committee includes Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee and Corporate Social Responsibility Committee.
The Non-Executive Directors, who continuously serve minimum two terms of five years each, are also entitled to one time commission of Rs. 10 lakhs at the time of stepping down from the Board.
During the year, there were no pecuniary relationships or transactions between the Company and any of its Non-Executive Directors apart from sitting fees and commission. The Company has not granted any stock options to any of its Non-Executive Independent Directors.
The details of remuneration paid, stock options and conditional grants made to Executive Directors and remuneration paid to Non-Executive Directors for the Financial Year ended 31st March, 2015 are provided hereinafter:
Stakeholders' Relationship Committee
The Stakeholders' Relationship Committee is comprised of Mr. O. P. Bhatt, Independent Director as the Chairman and Mr. Sanjiv Mehta and Mr. P. B. Balaji, as members of the Committee. Mr. Sridhar Ramamurthy ceased to be a member of the Committee and Mr. P. B. Balaji was appointed as a member of the Committee with effect from 1st July, 2014.
The role of Stakeholders' Relationship Committee is as follows:
• consider and resolve the grievances of shareholders of the Company with respect to transfer of shares, non-receipt of annual report, non-receipt of declared dividend, etc;
• ensure expeditious share transfer process in line with the proceedings of the Share Transfer Committee;
• evaluate performance and service standards of the Registrar and Share Transfer Agent of the Company;
• provide guidance and make recommendations to improve investor service levels for the investors.
During the Financial Year ended 31st March, 2015, the Committee met once on 19th December, 2014.
Details of Shareholders' / Investors' Complaints
Mr. Dev Bajpai, Executive Director (Legal & Corporate Affairs) and Company Secretary, is the Compliance Officer for resolution of Shareholder's/Investor's complaints. During the Financial Year ended 31st March, 2015, 99 complaints were received from the shareholders. All complaints have been redressed to the satisfaction of the shareholders and none of them were pending as on 31st March, 2015.
Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee comprises Mr. O. P. Bhatt as the Chairman and Mr. Aditya Narayan, Dr. Sanjiv Misra, Ms. Kalpana Morparia, Mr. Sanjiv Mehta and Mr. P. B. Balaji as members of the Committee. During the year Mr. Sridhar Ramamurthy ceased to be a member of the Committee. Mr. P. B. Balaji and Ms. Kalpana Morparia were appointed as members of the Committee with effect from 1st July, 2014 and 9th October, 2014 respectively.
The role of Corporate Social Responsibility Committee is as follows:
• formulating and recommending to the Board the CSR Policy and activities to be undertaken by the Company;
• recommending the amount of expenditure to be incurred on CSR activities of the Company;
• reviewing the performance of the Company in area of CSR;
• providing external and independent oversight and guidance on the environmental and social impact of how the Company conducts its business;
• monitoring CSR Policy of the Company from time to time;
• monitoring the implementation of the CSR projects or programs or activities undertaken by the Company;
During the Financial Year ended 31st March, 2015, the Committee met once on 28th April, 2014.
Risk Management Committee
In accordance with the requirement of Listing Agreement, your Company constituted a Risk Management Committee during the year. The Committee comprises Mr. Sanjiv Mehta as the Chairman and Mr. P. B. Balaji, Mr. Pradeep Banerjee, Mr. Dev Bajpai, Executive Director (Legal & Corporate Affairs) and Company Secretary and Mr. V. Hariharan, Internal Auditor as members of the Committee.
The role of Risk Management Committee is as follows:
• Implementation of Risk Management Systems and Framework;
• Reviewing the Company's financial and risk management policies;
• Assessing risk and minimizing the procedures;
• Framing, implementing and monitoring the risk management plan for the Company.
During the Financial Year ended 31st March, 2015, the Committee met once on 19th March, 2015.
Share Transfer / Transmission Committee
The Share Transfer / Transmission Committee has been formed to look into share transfer and related applications received from shareholders, with a view to accelerate the transfer procedures.
The Committee comprises three Directors of the Board. The Committee inter alia considers applications for transfer, transmission, split, consolidation of share certificates and cancellation of any share certificate in compliance with the provisions in this regard. The Committee is authorised to sign, seal or issue any new share certificate as a result of transfer, consolidation, splitting or in lieu of share certificates lost, defaced or destroyed.
The Committee meets at regular intervals to approve the share transfers and other related matters.
Committee for Allotment of Shares under ESOPs
The Committee for Allotment of Shares under ESOPs has been constituted to expedite the process of allotment and issue of eligible shares to the employees under the Stock Option Plan of the Company.
The Committee comprises three Directors of the Board and is constituted for approval, issue and allotment of shares under ESOPs, pursuant to and in terms of '2001 HLL Stock Option Plan', '2006 HLL Performance Share Scheme' and '2012 HUL Performance Share Scheme'.
Code of Business Principles / Whistle Blower Policy
The Code of Business Principles (CoBP) is the Company's statement of values and represents the standard of conduct which all employees are expected to observe in their business endeavors. The Code reflects the Company's commitment to principles of integrity, transparency and fairness. It forms the benchmark against which the world at large is invited
to judge the Company's activities. The copy of the Code of Business Principles is available on the website of the Company www.hul.co.in/aboutus/purposeandprinciples/
The Company has adopted a Whistle Blower Policy, as part of vigil mechanism to provide appropriate avenues to the Directors and employees to bring to the attention of the management any issue which is perceived to be in violation of or in conflict with the fundamental business principles of the Company. The Company has provided dedicated e-mail addresses whistleblowing. email@example.com and firstname.lastname@example.org for reporting such concerns. Alternatively, employees can also send written communications to the Company. The employees are encouraged to voice their concerns by way of whistle blowing and all the employees have been given access to the Audit Committee. The Company Secretary is the designated officer for effective implementation of the policy and dealing with the complaints registered under the policy. All cases registered under the Code of Business Principles and the Whistle Blower Policy of the Company, are reported to the Committee of Executive Directors and are subject to the review of the Audit Committee. The Whistle Blower Policy is available on the website of the Company www. hul.co.in/investorrelations/CorporateGovernance/
Preventing Conflict of Interest
The Board of Directors is responsible for ensuring that rules are in place to avoid conflict of interest by the Board members and the Management Committee. The Board has adopted the Code of Conduct for the members of the Board and Senior Management Team. The Code provides that the Directors are required to avoid any interest in contracts entered into by the Company. If such an interest exists, the Directors are required to make disclosure to the Board and to abstain from discussion, voting or otherwise influencing the decision on any matter in which the concerned Director has or may have such interest. The Code also restricts Directors from accepting any gifts or incentives in their capacity as a Director of the Company, except what is duly authorised under the Company's Gift Policy.
The members of the Board and the Management Committee annually confirm the compliance of the Code of Conduct to the Board. The Code of Conduct is in addition to the Code of Business Principles of the Company. A copy of the said Code of Conduct is available on the website of the Company www.hul.co.in/ investor relations/Corporate Governance/. In addition, members of the Board and Management Committee also submit, on an annual basis, the details of individuals to whom they are related and entities in which they hold interest and such disclosures are placed before the Board. Transactions with any of the entities referred above are placed before the Board for approval. Details of all Related Party Transactions are placed before the Audit Committee on quarterly basis.
Policy on dealing with Related Party Transactions
The Company has not entered in any material Related Party Transaction during the year. In line with requirement of the Companies Act, 2013 and Equity Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available at Company's website at www.hul.co.in/ investor relations/Corporate Governance/. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.
This policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at Arm's Length.
Policy on Material Subsidiary
The Company has adopted a Policy in line with the requirements of the Listing Agreement. The objective of this policy is to lay down criteria for identification and dealing with material subsidiaries and to formulate a governance framework for subsidiaries of the Company. The policy on Material Subsidiary is available on the website of the Company www.hul.co.in/investorrelations/ Corporate Governance/.
Share Dealing Code
The Company has instituted mechanism to avoid Insider Trading and abusive self-dealing. In accordance with the SEBI Regulations as amended, the Company has established systems and procedures to restrict insider trading activity and has framed a Share Dealing Code. The Share Dealing Code of the Company prohibits the Directors of the Company and other specified employees dealing in the securities of the Company on the basis of any unpublished price sensitive information, available to them by virtue of their position in the Company. The objective of this Code is to prevent misuse of any unpublished price sensitive information and prohibit any insider trading activity, in order to protect the interest of the shareholders at large. The Board of Directors of the Company have adopted a new Share Dealing Code, in line with new SEBI (Prohibition of Insider Trading) Regulations, 2015.
The details of dealing in Company's shares by Specified Employees (which include members of the Management Committee and Directors) are placed for intimating the Board on quarterly basis. The Code also prescribes sanction framework and any instance of breach of code is dealt with in accordance with the same. A copy of the Share Dealing Code of the Company is made available to all employees of the Company and compliance of the same is ensured. The Share Dealing Code is available on the website of the Company www.hul.co.in/investorrelations/CorporateGovernance/ Dealing HulShares/.
UN Global Compact
Unilever is a signatory to the United Nations Global Compact Programme and is fully committed to the principles of the UN Global Compact which covers human rights, lab our practices, environment commitment and prevention of corruption in business organizations. The UN Global Compact is a symbol of leadership in a complex business world and provides a forward looking forum in which the United Nations, companies and civil society organisations can come together in an open and transparent dialogue. The Company's CoBP mechanism upholds these principles in all aspects of its business operations. looking forum in which the United Nations, companies and civil society organisations can come together in an open and transparent dialogue. The Company's CoBP mechanism upholds these principles in all aspects of its business operations
AFFIRMATION AND DISCLOSURE
All the members of the Board and the Management Committee have affirmed their compliance with the Code of Conduct as on 31st March, 2015 and a declaration to that effect, signed by the Managing Director and Chief Executive Officer (CEO), is attached and forms part of this Report.
There were no materially financial or commercial transaction, between the Company and members of the Management Committee that may have a potential conflict with the interest of the Company at large.
All details relating to financial and commercial transactions where Directors may have a pecuniary interest are provided to the Board and the interested Directors neither participate in the discussion nor vote on such matters.
DISCLOSURE OF PENDING CASES / INSTANCES OF NON-COMPLIANCE
There were no non-compliances by the Company and no instances of penalties and strictures imposed on the Company by the Stock Exchanges or SEBI or any other statutory authority on any matter related to the capital market during the last three years.
With respect to the Show Cause Notice received from the Securities and Exchange Board of India (SEBI) last year for alleged violation of the provisions of Regulation 8(3) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (SAST Regulations, 1997) with respect to delay in filings in the year 2008 and 2010, the Company had filed an application for compounding the matter with SEBI. SEBI has passed an order for compounding of the matter on payment of requisite compounding fee. The matter accordingly stands closed.
The Company has been impleaded in certain legal cases related to disputes over title to shares arising in the ordinary course of share transfer operations. However, none of these cases are material in nature, which may lead to material loss or expenditure to the Company.
COMPLIANCE WITH THE GOVERNANCE FRAMEWORK
The Board of Directors periodically reviewed the compliance of all applicable laws and steps taken by the Company to rectify instances of non-compliance, if any. The Company is in compliance with all mandatory requirements of Clause 49 of the Listing Agreement. In addition, the Company has also adopted the following non-mandatory requirements to the extent mentioned below:
• The Board & Separate posts of Chairman and CEO: The
positions of the Chairman and the CEO are separate. Mr. Harish Manwani, Non Executive Chairman of the Company maintains office at the Company's expenses and is also allowed reimbursement of expenses incurred in performance of his duties.
• Shareholders rights: The quarterly results alongwith the press release are uploaded on the website of the Company www.hul.co.in/investorrelations/QuarterlyResults/ The soft copy of the quarterly results is also sent to the shareholders who have registered their e-mail addresses.
• Audit qualifications: Company's financial statements are unqualified
• Reporting of Internal Auditor: The Internal Auditor of the Company directly reports to the Audit Committee on functional matters.
SECRETARIAL STANDARDS AND SECRETARIAL AUDIT REPORT
The Company has undertaken Secretarial Standards Audit for the year 2014-15 for audit of secretarial records and procedures followed by the Company in compliance with relevant Secretarial Standards issued by the Institute of Company Secretaries of India, which were recommendatory in nature and Company voluntarily decided to adhere to the same. The Secretarial Standards Audit Report is part of this Annual Report.
The Company has also undertaken Secretarial Audit for the year 2014-15 which, inter alia, includes audit of compliance with the Companies Act, 2013, and the Rules made under the Act, Listing Agreement and Regulations and Guidelines prescribed by the Securities and Exchange Board of India and Foreign Exchange Management Act, 1999. The Secretarial Audit Report is part of this Annual Report.
During the year, a Special Resolution for appointment of Mr. P. B. Balaji as the Executive Director, Finance & IT and Chief Financial Officer of the Company with effect from 1st July, 2014 was passed by the Shareholders of the Company through Postal Ballot. In the Postal Ballot conducted pursuant to Clause 35B of the Listing Agreement, the Company had also offered e-voting facility, through National Securities Depository Limited, as an alternate, to enable the shareholders to cast their votes electronically
Annual General Meeting for the financial year 2014-15
Date: Monday ,29th june,2015
Venue : UNILEVER HOUSE ,B.D.SAWANT, MARG CHAKALA, ANDHERI (EAST).MUMBAI-400099
Time : 2.00pm
Book closure dates for final dividend : Tuesday 23rd june,2015to Monday 29th june,2015(both days inclusive )
Last date of receipt of proxy forms : Saturday, 27th june,2015 before 2p.mat registered office of the company
Calendar of Financial Year ended 31st March, 2015
The meetings of Board of Directors for approval of quarterly financial results during the Financial Year ended 31st March, 2015 were held on the following dates
First Quarter Results : 28th July, 2014
Second Quarter and Half yearly Results : 27th October, 2014
Third Quarter Results : 19th January, 2015
Fourth Quarter and Annual Results : 8th May, 2015
Tentative Calendar for financial year ending 31st March, 2016
The tentative dates of meeting of Board of Directors for consideration of quarterly financial results for the financial year ending 31st March, 2016 are as follows
First Quarter Results : 21st jully,2015
Second Quarter and Half yearly Results : 14th October,2015
Third Quarter Results : 27th January,2016
Fourth Quarter and Annual Results :29th april,2016
The Board of Directors at their meeting held on 8th May, 2015, recommended a Final Dividend of Rs. 9.00 per equity share of face value of Re. 1/- each, for the financial year ended 31st March, 2015. Together with the Interim Dividend of Rs. 6.00 per equity share paid on 14th November, 2014, the total dividend for the year works out to Rs. 15.00 per equity share of face value of Re. 1/- each. Final Dividend, if approved by Members, will be paid on or after 3rd July, 2015.
During the year under review, the Company has credited Rs. 6.66 crores to the Investor Education and Protection Fund (IEPF) pursuant to Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001.
Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 30th June, 2014 (date of last Annual General Meeting) on the Company's website www.hul.co.in/ investor relations/ and on the website of the Ministry of Corporate Affairs.
Mergers and Demergers
The details of Mergers and Demergers with Companies and respective share exchange ratios are available on 'Investor Centre' page on the website of the Company www.hul.co.in
The details of Plant Locations form part of this Report.
COMMUNICATION TO SHAREHOLDERS
Effective communication of information is an essential component of Corporate Governance. It is a process of sharing information, ideas, thoughts, opinions and plans to all stakeholders which promotes management-shareholder relations. The Company regularly interacts with shareholders through multiple channels of communication such as results announcement, annual report, media releases, Company's website and subject specific communications.
The quarterly, half yearly and annual results of the Company's performance are published in leading newspapers such as Times of India and Maharashtra Times. These results are also made available on the website of the Company www.hul.co.in investor relations/ Quarterly Results. The website also displays vital information relating to the Company and its performance, official press releases and presentation to analysts. The Company also sends quarterly, half yearly and annual results as well as the notice of the Board Meeting to Members on e-mail.
The Investor Centre of the Company's website provides more than 50 Frequently Asked Questions on various topics related to transfers and transmission of shares, dematerialization, nomination, change of address, loss of share certificates, dividend and sub-division of share certificates. In addition, various downloadable forms required to be executed by the shareholders have also been provided on the website of the Company.
The Quarterly Results, Shareholding Pattern and all other corporate communication to the Stock Exchanges are filed through NSE Electronic Application Processing System (NEAPS) and BSE Listing Centre, for dissemination on their respective websites.
Web-based Query Redressal System
Members may utilise the facility extended by the Registrar and Transfer Agent for redressal of queries. Investors may visit <http://karisma.karvy.com> and click on "INVESTORS" option for query registration through free identity registration process.
Investors can submit their query in the "QUERIES" option provided on the above website, which would give the grievance a registration number. For accessing the status / response to the query submitted, the grievance registration number can be used at the option "VIEW REPLY" after 24 hours. Investors can continue to put an additional query relating to the case till they get a satisfactory reply.
Investors can provide their feedback on the services provided by the Company and its Registrar and Transfer Agent by filling the Shareholder Satisfaction Survey form available in Investor Centre on website of the Company at www.hul.co.in/investorrelations/ Shareholder Satisfaction Survey/.
Alternative Dispute Redressal
Long pending litigations involve significant investment as monetary value of the disputed shares and accrued dividends / other benefits are locked up unutilised till the dispute is settled. Further, in terms of the requirements of the Companies Act, 1956, such dividends / other specified incomes remaining unclaimed / unpaid for a period of seven years are to be credited to the Investor Education and Protection Fund and the Shareholders are not entitled to claim the same thereafter.
Keeping the above in mind, the Company in 2004, pioneered the mechanism of providing an alternate dispute redressal for Shareholders to resolve the shares related disputes pending before the courts / authorities by amicable settlement. The Company had started this unique initiative of organising Alternative Dispute Redressal meetings wherein aggrieved investors come face to face and get a chance to settle their disputes, some of which were pending for years.
A number of Shareholders have availed the benefit of this process and the Company through its various initiatives keeps exploring the possibilities of settling such issues. The process helps the investors in releasing the locked up investment and save their time consumed in contesting legal proceedings. The objective of this process is to facilitate quick resolution of the dispute between the parties.
The Shareholders who are willing to avail the benefits of Alternative Dispute Redressal mechanism may approach the Investor Service Department of the Company at the Registered Office of the Company.
Consumers / Customers
In line with one of the Company's key tenets of Consumer and Customer Centricity, the Company commenced a process of resolving consumer and customer disputes and grievances through an alternative disputes redressal mechanism. The Company appointed four retired Judges of different High Courts, one in each region, to act as Ombudsman to hear the Company's consumers and customers in a bid to resolve long pending disputes. The Ombudsman independently reviews the merits of the complaint and decides on the issue. The Company has taken the view that the decision arrived at such disputes resolution meetings, while being fully binding on the Company, may not be binding on its consumers and customers and if they choose to continue with litigation, they are free to do so. These meetings were held in all the four regions and achieved reasonable success. The Company believes that such independent dispute resolution mechanism will further reinforce its commitment and credibility with its consumers and also set new benchmarks for the industry.
The Company has also set a consumer care helpline 'Levercare', to help consumers reach the Company for their grievances, suggestions, ideas and to help brands reach out to consumers.
Address for Correspondence
All shareholders' correspondence should be forwarded to M/s. Karvy Computershare Private Limited, the Registrar and Transfer Agent of the Company or to the Investor Service Department at the Registered Office of the Company at the addresses mentioned below.
The Company's dedicated e-mail address for Investors' Complaints and other communications is email@example.com